PANAMA STRONGMAN SAID TO TRADE IN DRUGS, ARMS AND ILLICIT MONEY

Published: June 12, 1986

(Page 2 of 5)

According to the State Department, White House, Pentagon and intelligence sources, there has been longstanding evidence among intelligence officials of General Noriega's activities, including his relations with the Cuban Government and his willingness to sell arms to the M-19 rebel group in Colombia.

The goal of M-19, which is pro-Cuban, is to overthrow the democratically elected Government. Over the years, the guerrilla group has been responsible for violent attacks that have led to hundreds of deaths.

Of the assertion on the M-19 guerrillas, Captain Lim Yueng, the Panamanian Army spokesman, said: ''We have no information on M-19. We do all we can to avoid Panama being used as a trampoline for terrorism.''

The captain also denied any Cuban intelligence efforts in Panama or that General Noriega was involved in any shady activities with Cuba. He also denied any export of embargoed goods to Cuba. ''Cuba has an embassy here and normal relations with us like many countries,'' the captain said.

He added, ''We've captured drugs here, and are doing our best to collaborate with the United States to fight narcotraffic in Panama.'' 'A Critical Misjudgment' In Killing of a Critic

What has come to be seen within the United States Government as the Noriega problem was heightened by recent intelligence directly tying the general and the top leadership of the Panama Defense Force to the slaying last September of Dr. Hugo Spadafora, one of the army's leading critics.

In his statement, Captain Lim Yueng said: ''There is absolutely nothing in this case involving the army. Spadafora had many enemies. The institution of the armed forces absolutely denies any ties to the death of Spadafora. We criticize this crime.''

A classified Defense Intelligence Agency report on General Noriega described his involvement in the killing as ''a critical misjudgment'' on his part. The D.I.A. is also known to have intelligence demonstrating that General Noriega ordered the killing, according to an official with first-hand information.

Dr. Spadafora's decapitated body was found stuffed in a United States mailbag in Costa Rica just across the Panamanian-Costa Rican border. The killing occurred a few weeks before General Noriega ousted the civilian President, Nicolas Ardito Barletta, who was about to name an investigating commission.

Mr. Barletta was replaced by Eric Arturo Delvalle, who is viewed by American officials as another nominal leader, with the army commander actually in control of the country.

Some senior White House officials have privately been concerned about General Noriega's activities. Late last year Vice Adm. John M. Poindexter, then the newly appointed national security adviser, visited the general and privately told him to ''cut it out'' - alluding to the drug and money laundering activities and his close relations with Cuba, according to a Government official.

Admiral Poindexter was later quoted as having raised questions about an alternative to the Panamanian general.

The issue is a chronic one for American policy makers: how far to overlook corruption and a lack of democratic principles in allies in order to protect secret intelligence installations.

Senior civilian officials in the Pentagon, headed by Nestor D. Sanchez, a former C.I.A. and White House aide for Latin American issues who is a Deputy Assistant Secretary of Defense for Inter-American Affairs, are known to be concerned that any successor to General Noriega might not be willing to tolerate the American military activities that now exist in Panama. In Panama, a Web Of U.S. Intelligence Since the early 1980's the National Security Agency, operating through its military components in the Army, the Navy and the Air Force, has vastly increased its intelligence-gathering activities in Panama. It is now capable of monitoring all of Central America and most of South America from its Panamanian installations.

The Central Intelligence Agency has also used military bases in Panama, especially Howard Air Base near Panama City, as a jumping-off point for intelligence gathering and for agents sent to Nicaragua, according to intelligence officials.

In interviews, Reagan Administration officials emphasized the nature of the evidence tying General Noriega and the top leadership of the Panama Defense Force to money-laundering and drug trafficking activities.

One official who said he had extensively reviewed the most sensitive intelligence available to the American Government on General Noriega, including reports from agents and intercepts, described most of the specifics as ''having to do with gun and drug running.''

He said General Noriega's name appeared ''over and over'' in connection with specific dates, places and contacts in money-laundering and drug activities.

Much of the information, the sources acknowledged, has been gleaned from National Security Agency intercepts, among the most highly classified information in the Government.

In interviews, intelligence officials repeatedly described General Noriega as brilliant in masking much of his direct involvement, preferring to operate through cutouts or as a secret partner in Panamanian trading companies and banks.